Basis levels for U.S. corn at interior Midwest elevators and ethanol plants firmed Tuesday, supported by slow farm sales and strong domestic demand.

Delayed harvests in the eastern Midwest pushed cash bids as well, as processors push for supplies held tightly by U.S. farmers. Deliveries of corn are sporadic and very inconsistent across the corn belt, said Karl Setzer, analyst with MaxYield Cooperative in West Bend, Iowa.

Industry analysts say buyers are pushing prices, as farmers choose to store harvested supplies, awaiting higher prices.

Increased farm storage is restricting grain flow into the supply line, and subsequently boosting cash basis, as demand from processors and exporters pick up pace, analysts add.

Basis is the difference between cash and futures market prices.

Processors and ethanol plants in the eastern Midwest report price premiums for corn supplies. The basis ranged from 3 cents to 30 cents over December futures, according to data from the U.S. Department of Agriculture.

Midday barge basis levels for November shipment of corn to the Louisiana Gulf ranged from 57 cents to 71 cents over December futures, up 2 cents from Monday, according to data from USDA.

River basis has firmed in some regions, but faltered in others. Gulf basis was mostly steady this morning as demand is weak, but deliveries are very light, added Setzer.

Otherwise, grain buyers and sellers are taking a cautious approach, unwilling to take on added risk ahead of Wednesday's supply and demand projections from federal forecasters.

The USDA is scheduled to release its latest forecast for production, inventories and demand on Wednesday at 8:30 a.m. EST (1330 GMT).

The USDA in its monthly crop report is expected to forecast the corn harvest at 12.402 billion bushels, down 0.2% from its October estimate, according to 22 analysts surveyed by Dow Jones Newswires.

The USDA is expected to lower its estimate for corn inventories as of Aug. 31, 2012, when the crop year ends, to 801 million bushels, down 7.5% from the USDA's October estimate.

-By Andrew Johnson Jr, Dow Jones Newswires, 312-347-4604, andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires

November 08, 2011 14:16 ET (19:16 GMT)